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Tesla has decided to become a technical partner in a nickel mine – which is needed for the lithium-ion batteries that power electric cars.
Elon Musk’s auto company will also buy nickel from the Goro mine on the small, peaceful island of New Caledonia to secure its long-term supply.
The move comes amid growing concerns about future nickel supplies.
New Caledonia is the world’s fourth largest producer of nickel, which saw a 26% price hike last year.
“Nickel is our primary concern for increasing lithium-ion cell production,” Musk said on Twitter last month.
New Caledonia is a French overseas territory, although it has seen more and more calls for its independence.
What is the Goro mine?
New Caledonia’s huge nickel reserves are crucial to the local economy and the Goro mine in the south of the island has the potential to become one of the largest nickel producers in the world.
In December, its owners, Brazilian mining giant Vale and the French state, attempted to sell it to Swiss commodities trader Trafigura.
Residents were so angry at the loss of local ownership and control that it sparked the collapse of the New Caledonian government and led to workers going on strike.
A new deal struck Thursday by independence groups, loyalist parties and indigenous Kanaks will see the mine sold to a consortium that now includes employees as well as three regional provinces. Trafigura will only hold 19%.
Tesla will be involved in a “technical and industry partnership” to help with product and sustainability standards while taking nickel for its battery production, according to the agreement.
He will play the role of technical consultant in the design and improvement of the manufacturing process.
Vale said the deal “would allow operations to continue on a sustainable course for the future, preserving jobs and bringing economic value to the country.”
Greater control
Although Tesla does not own an equity stake, its partnership in the mine gives it greater control over its electric battery supply chain as it ramps up production.
Nickel is mainly mined in Russia, Canada, New Caledonia and Indonesia and mainly used to make stainless steel. But the growth of electric vehicles has added a new source of demand for the metal.
Nickel mining, particularly the use of coal-fired electricity, comes at an environmental and health cost, and the mines have been repeatedly criticized by activists.
Thursday’s deal called for stronger environmental standards and set a target for the mining complex to be carbon neutral by 2040.
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